“Let’s leave a LEGACY.” – How did this company further expand its already MASSIVE video game lore? [Monday: Marketing Marvels]
According to an article from research and publishing platform Emerald Open Research, video games have become a phenomenal form of entertainment over the last 60 years.
League of Legends.
Playing games like the ones mentioned above has become a common activity for younger generations and a tool for connection among older generations.
… and when the COVID-19 pandemic hit different parts of the world, a lot of people turned to video games as a form of stress relief!
Thanks in part to the developers of these games for giving consumers an avenue to relax, have some fun, and get through tough times!
Here’s one of the companies that specialize in creating and improving some of the famous games across the globe:
Square Enix Holdings Co., Ltd. is a Japanese entertainment conglomerate that is best known for its role-playing video game franchises such as:
- Final Fantasy
- Dragon Quest
- Kingdom Hearts
- Lara Croft: Tomb Raider
- Deus Ex
- Just Cause
Outside of video game publishing and development, the company is also in the business of merchandise, arcade and amusement facilities, and Manga publication under the Gangan Comics brand.
[Manga: Pertains to comics or graphic novels originating from Japan. This term refers to both comics and cartooning.]
What does Square Enix do to gain a competitive advantage in the video gaming industry?
One, Square Enix makes strategic “buy” decisions and collaborations to maximize profitability.
Two, the company follows a framework called Polymorphic Content, which means original concepts are immediately translated into different media such as movies, novels, games, and others.
Let’s take a look at how Square Enix used the polymorphic content framework in 2017 to create brand messaging that left a legacy for some of its widely-known games:
To celebrate the 20th anniversary of Tomb Raider in 2017, the company set up a multitude of events and releases including:
- A survival training class
- A Jeep giveaway
- A specially composed music collection and concert
- An art book collection
- The “Rise of the Tomb Raider: 20th Anniversary Edition” video game
With the special edition video game, players could explore the Croft Manor in virtual reality because the game was playable via PlayStation VR’s theater mode.
The exciting events and releases for Tomb Raider’s 20th anniversary made fans more interested about what Square Enix and the video game have in store for them!
As the video game turned 15 years old in March 2017, Square Enix surprised Kingdom Hearts’ loyal fan base across the globe by combining various characters from Final Fantasy, The World Ends With You, and the Walt Disney Universe in an anniversary edition Kingdom Hearts video game.
Ah, the crossover fans had been wanting to see!
Square Enix also hosted a special exhibit and Kingdom Hearts Clock giveaway at the Tokyo Metro Marunouchi Shinjuku Station Promenade as part of the celebration.
The video game crossover, exhibit, and clock giveaway made fans love Kingdom Hearts even more and anticipate the release of Kingdom Hearts III, which was being developed at that time!
Final Fantasy’s 30th anniversary was one of the biggest events for Square Enix in 2017!
To kick off the celebration for its best-selling franchise, the company held a special event in Tokyo, which included special downloadable content for Final Fantasy XV, Final Fantasy merchandises, and an HD remake of the Final Fantasy VII video game.
Aside from that, Square Enix invited fans to share via social media how the Final Fantasy franchise impacted their lives using the hashtag, #FFLegacies. This led to the creation of the “Final Fantasy XV: New Legacy,” a video that showcased fans’ memories and ideas.
Square Enix also gave selected fans an opportunity to preview the latest Final Fantasy XV video game.
According to what the company said on its website,
“By having fans share their personal experience, it serves as a reminder that much like how each Final Fantasy has a completely different story, world, and characters, we all bring distinctive and new perspectives to the legacy that is Final Fantasy.”
Bringing Final Fantasy to Life
Aside from the celebrations mentioned above and the live-action trailer that brought Final Fantasy XV to life on screen, Square Enix partnered with medical devices company Open Bionics to make the video game even closer to reality and the future of technology.
By developing a prosthetic arm that was inspired by the “Deus Ex: Mankind Divided” video game’s main character, Adam Jensen!
The Deus Ex and Final Fantasy video games are separate franchises under Square Enix. However, when the company decided to put the Deus Ex series on the back-burner for a while, the game’s main character was temporarily added to the Final Fantasy XV’s cast. This was to let fans know that the game wasn’t dead and simply had to “wait for its turn in the spotlight.”
The real-life prosthetic was displayed at the Electronic Entertainment Expo (E3) and at the San Diego Comic Con in 2017 to promote the crossover in the Final Fantasy XV game.
By expanding its already MASSIVE Final Fantasy lore, remastering and retelling classic game stories, exploring fantasy worlds in virtual reality, and opening conversations about technological advances, Square Enix was able to create a legacy for video game enthusiasts and beyond!
In the past five years, Square Enix Holdings Co., Ltd. has recorded revenues of:
- JPY 254.0 billion in 2017
- JPY 252.4 billion in 2018
- JPY 266.2 billion in 2019
- JPY 265.3 billion in 2020
- JPY 331.0 billion in 2021
*Square Enix Holdings Co., Ltd. reports full-year earnings every March 31, the end of its financial year.
Thanks to its openness to the future of technology and creativity to produce polymorphic content for its video game franchises, Square Enix was able to generate robust revenues in the past five years.
Square Enix Holdings Co., Ltd.’s Earning Power: Valens Research vs. As-reported numbers
Square Enix Holdings Co., Ltd. (9684:JPN) makes for a great case study that we come back to regularly. One great reason?
The company has proven itself to be a better earning power generator than investors might think.
So, how well has Square Enix been growing its business in the past years?
The research doesn’t lie—nor do the results. Earning power (the blue bars) continues to show results higher on average than what traditional databases show.
The blue bars in the chart above represent Square Enix’s earning power (Uniform Return On Assets). Historically, Square Enix has seen generally robust profitability. Its Uniform ROA ranged from -2% to 26% in the past sixteen years, or an average of 12%. Uniform ROA is at 23% in 2021.
The global ROA is just 6%.
The orange bars are the company’s as-reported financial information. If you relied on these numbers, you will see a company with understated profitability. As-reported ROA (return on assets, a measure of earning power) only ranged from -2% to 10% in the past sixteen years. Its as-reported ROA in 2021 was only at 9%, which is nearly 3 times lower than its Uniform ROA in 2021.
That’s what you’ll see in Yahoo Finance, Google Finance, and most other databases.
The company’s stock price also performed better than the rest of the stock market over the decade, which we can see in the blue line in the chart below. Its returns have been well above the market.
The numbers show that Square Enix has been doing well and making a profit.
The company believes that each consumer has his or her own definition of happiness.
… and for some, it’s in playing video games that not only tell a new and interesting story, but also represent an important memory.
That’s why Square Enix works to achieve that in developing games like Tomb Raider, Kingdom Hearts, Final Fantasy, etc.
By providing high-quality content, services, and products, the company helps players discover one part of the happiness they’re looking for. That is…
The happiness brought by unforgettable experiences and unparalleled entertainment in the video gaming industry!
About The Dynamic Marketing Communiqué’s
“Monday Marketing Marvels”
Too often, industry experts and the marketing press sing the praises of some company’s marketing strategy.
…Only for the audience to later find out that their product was a flop, or worse, that the company went bankrupt.
The true ROI in marketing can’t be separated from the business as a whole.
What good is a marketing case study if one can’t prove that the company’s efforts actually paid off?
At the end of the day, either the entire business is successful or it isn’t. And the role of marketing is always paramount to that success.
Every Monday, we publish a case study that highlights the world’s greatest marketing strategies.
However, the difference between our case studies and the numerous ones out there, is that we will always make certain that the firm really did generate and demonstrate earning power worthy of study in the first place (compliments of Valens Research’s finance group).
By looking at the true earnings of a company, we can now rely on those successful businesses to get tips and insights on what they did right.
We’ll also study the greatest marketing fails and analyze what they did wrong, or what they needed to improve on. We all make our mistakes, but better we learn from others’ mistakes—and earlier, rather than later.
Hope you found this week’s marketing marvel interesting and helpful.
Stay tuned for next week’s Monday Marketing Marvels!
Head of Marketing
Valens Dynamic Marketing Capabilities
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